Tuesday tips round-up: Taylor Wimpey, SABMiller

Markets seem to have read the runes wrong when it comes to housebuilders. Taylor Wimpey is a case in point in that regard. There were no negative aspects to the firm's trading statement. There was no negative impact from the Mortgage Market Review. The prices of homes rose by 9% in the first six months of the year. Furthermore, total orders totalled £1.6bn by the close of the period, well above the £1.26bn seen in the previous year. The company also has capital discipline and the wherewithal to maintain it. Taylor Wimpey will return another £200m to shareholders next year and it has approximately five and a half years' worth supply of land, so it need not buy now. Only 10% of its sales come from the south east, it has no exposure to the fragile London market and it is benefitting from the Treasury's Help-to-Buy scheme. On about 12 times earnings the stock is a long-term buy, writes The Times's Tempus. At about 10 times operating profits, brewer SABMiller's divestment of its stake in South African hotel and casino chain Tsogo Sun fetched a decent price and will allow for greater strategic focus. However, the impact of the transaction on the company's financial position should not be exaggerated as the £624m price tag amounts to under 2% of the company's total revenues and operating profits. More important is the slowdown that the firm is facing in beer sales in Europe, much like the rest of the sector. Business in the UK is under pressure from the craft beer revival and even Poland and the Czech Republic sales slumped under the weight of an economic slowdown and poor weather. On the upside, the firm's main markets are the US, Africa and Latin America. Put together, these three markets make up the lion's share - about two-thirds- of group profits and they all saw increased profitability last year. The stock is a quality name for the long-term, but with the shares trading on 22 times forward earnings and on the basis of forecasts for earnings growth they look a bit expensive, says The Daily Telegraph's Questor team. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB